Solve #7

D6. Compute the value of the bond in D.4 if investors suddenly required a yield to maturity of 0.30%U on the bond.

yield to maturity= .30%(U)=3%

Payment=1000(2.25%) =22.5

Payment=22.5/2=11.25

Semiannual=30*2=60

Semiannual=.03/2=.015

B=11.25 [1-1/ (1.015) ^60]/.015+1,000/ (1.015) ^60= 852.32

7.-Compute the value of the bond in D.6 if there is a 1 basis point change in the required yield due to a fall in the default risk of the debtor (where 1 basis point=0.01%)